This course builds on previous concepts and outlines strategies and tactics for forming, financing and launching a new venture. Topics to be addressed will include building the new venture’s initial management team, identifying and reaching out to early customers, developing financial plans, raising startup and initial growth financing, and preparing for and managing rapid growth. Course objectives: Entrepreneurial Team Building: Develop an understanding of the what is required in a new venture Initial Go-to-Market Strategy: Develop a plan to identify and approach your first customers Financial Forecasting: Building financial projections for the new venture Entrepreneurial Financing: Raising Equity Capital for the new venture Growing the Business: Monitoring the new venture’s health and scalability
Go-To-Market Strategy
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Из курса от партнера University of Illinois at Urbana-Champaign
Entrepreneurship II: Preparing for Launch
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University of Illinois at Urbana-Champaign
35 оценки
Курс 6 из 7 — Specialization Innovation: From Creativity to Entrepreneurship
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Module 1: Earning Revenue
In this module, we will discuss go-to-market strategies.
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Thomas E. ParkinsonVisiting Professor
University of Illinois College of Business
Welcome to today's lesson.
Our topic for today is developing your go-to-market strategy.
Sales is at the center of the word cloud for today.
We'll be talking about marketing channels,
customer relationships, and more.
But the goal of your go-to-market strategy is to generate sales.
Your go-to-market strategy is your action plan for making sales.
You really do need to think of it as an action plan.
It describes the specific steps you're going to
take to get customers to purchase your products or services.
It describes the types of customers you'll pursue,
the value proposition you'll offer,
the channels you will use for marketing and sales,
and the metrics you'll use to monitor your effectiveness.
Like the rest of your business plan,
it should be something that you're constantly evaluating and improving
as you learn more about your customers and move beyond your early adopter markets.
Specifically, your go-to-market strategy should answer the following questions:
Who are your target customers?
Which customer needs will you address?
What sort of relationship do you need to have with your customers?
And how will they actually purchase your products or services from you?
More on this later. You should recognize that
your go-to-market strategy as your company is
just getting started is likely to be
quite different from what it is after you're up and running.
Your early adopter may be different from your mainstream customer.
You may have to do a lot more now to build awareness about your company
than you will later on.
And because you probably have significant budget constraints at the start,
the channels you select now may be very different
from the ones you'll use when you have more resources.
Your go-to-market strategy starts with an understanding of your target customers.
Are you selling to other businesses or to consumers?
If you're selling to other businesses,
who are your end users?
What are their job titles or positions?
Who else has to be involved in the purchase decision?
Do you need to have the support of
top management inside the company in order to make a sale?
Or can it be handled at a department or functional level?
Is there a financial or purchasing manager that has to approve the sale?
You should be able to describe your strategy for getting buy-in at each level.
Your sales process has to start with building awareness.
You probably don't have enough money to buy ads during the Super Bowl,
but there are plenty of less expensive things that you can do, even at the start.
You can certainly create a website,
even if it's only a landing page where potential customers can request more information.
Then you should be reaching out through
your personal networks asking for as many referrals as you can.
Try to position yourself as an expert so that when people are
searching for a solution to their problem online, they can find you.
Blogging and publishing newsletters or
white papers will help establish you as an expert in the space.
Content is really important.
Don't just put ads out there.
Publish information that customers will find valuable,
even if they're not ready to purchase your solution.
This is one way to establish credibility to make
your sales process much smoother in the future.
Marketing is what companies do in order to generate leads or sales prospects.
Traditionally, this has been done through outbound marketing channels.
These include paid advertising, public relations,
direct mail, telemarketing and email blasts, and in-person sales calls.
They can all work, but they can also be very expensive.
Too expensive for a lot of startup companies.
Inbound marketing can be much less expensive
and much more effective than traditional outbound marketing.
Such search engine optimization,
viral marketing campaigns, content distributed on social media,
online and offline events,
these are all potentially effective ways to build awareness,
drive traffic to your website, and grow your sales funnel.
Establishing yourself as an expert is important,
you want to be seen as a valuable source of information to potential customers,
even before they consider purchasing from you.
Your personal and your company blogs can be helpful here and your website
should provide links to articles that have been written about you, and newsletters,
white papers, and other materials that you've read.
As Guy Kawasaki says, "If you have more money than brains,
you should focus on outbound marketing.
If you have more brains than money,
you should focus on inbound marketing."
There are plenty of books, blogs, and websites
out there for you to learn more about effective inbound marketing.
While you will probably be doing a lot of direct selling at the start,
it's likely that you're going to have to sell
through one or more channels to reach the broader market.
A channel is simply a way of bringing your products or services to the market,
so that they can be purchased by customers.
Direct selling is a channel.
So are distributor's, retailer's,
system integrator's, and manufacturer's representatives.
The most direct online sales channel is
e-commerce that you conduct on your own company's website.
You can also sell both physical and digital goods through online stores, like
Amazon, or aggregators, like chewy.com for pet products and Zappos for shoes.
You can sell apps on the iTunes Store or Google Play.
Flash sale channels include sites like Groupon and Hotel Tonight.
The channels you select are important parts of your overall business model.
When you're making your decisions,
you need to ask yourself and your customers some important questions.
What type of relationship do you need to have with your end users?
Will they require a lot of training or customer support?
Do you need to have a lot of feedback from them on how they use the product?
If so, you're going to need to have a channel
that allows you to stay very close to the customer.
The same is true if you're counting on them to be repeat customers.
Are you offering a stand-alone product or is it part of a broader solution?
Some customers try to avoid dealing with lots of small vendors.
They prefer to purchase a bundled solution from
a systems integrator or rely on a single distributor for many of their purchases.
Can you afford your sales channel?
If you're going to rely on channel partners to sell and/or service your products,
they're going to need to be paid for it.
The price that your end users pay will have to be high enough
for everyone in the channel including you to make money.
And can you rely on your sales channel to really earn its money?
Can your channel partners effectively sell your products, or will
you have to step in to demonstrate the product or close the sale?
Your go-to-market strategy should include
the metrics you're going to track to determine whether
you're being as effective as you need to be in reaching customers and closing sales.
Without the right metrics,
you can spend a lot of money without getting
the information you need to be able to tell what's working and what's not.
Here are some of the metrics that you should be tracking.
Revenue per dollar of sales expense is simply the ratio you get when you
divide your total sales and
marketing expenditures by the revenue you generated as a result.
If you're spending $2 on sales and marketing,
for every $1 in revenue that you're generating, you've got a problem.
On the other hand, if you're spending only 10 cents on
sales and marketing for every dollar in revenue,
then you might want to consider spending a little
more in order to grow your sales more quickly.
This ratio can be distorted if you have a very long sales cycle, meaning that the money
you spend on sales and marketing this period won't result in revenue until next period.
Another important metric is your sales closing or conversion rate.
If your sales forces making 50 sales calls for every 1 sale that they close,
it's likely that they're talking to the wrong customers
or they're not communicating your value proposition very well.
The same is true online.
If you've got thousands of visitors to your website for
every one person who clicks on your buy now button,
you're probably marketing to the wrong people.
You should also be keeping a very close watch on your sales cycle.
This is the length of time that it takes to close a typical sale,
from first contact until they sign on the bottom line.
In some industries, this can be really long and there's not much you can do about it.
If your sales cycle is significantly longer
than it is for others in your industry, then something's wrong.
You may be talking to the wrong people within your customers organizations.
Ultimately, you're going to want to track
your customer acquisition cost and the lifetime value of a customer.
Your customer acquisition cost is
the average amount of money it costs you to acquire a new customer.
The lifetime value of a customer is
the average amount of profit that you can expect to earn from that customer.
We'll talk more about these metrics in a future lesson.
There are a lot of metrics that companies track that
really don't matter as much as the ones we just discussed.
These metrics are sometimes referred to as
vanity metrics because they make you feel good about the results you're
getting from your sales and marketing efforts, but they really don't give you
very much actionable information, or create much value for the business.
Vanity metrics include things like the number of likes you're
getting on Facebook or the number of followers you have on Twitter.
They also include website traffic,
unless it's leading directly to revenue.
The numbers of visitors,
page views, and so on are only important if you can
connect them directly to the acquisition of paying customers.
You should look at email open rates and free product downloads the same way.
What you really want are email responses and product trials that lead to sales revenue.
A problem that I see in many startups is that
their go-to-market strategies seem to be
designed more for a growth company than a startup.
The entrepreneurs can talk about the customers they're going to target and
the channel strategy they're going to use
after the company has been up and running for a while,
but they don't do a very good job of explaining how
they're going to secure their early adopter customers.
It's one thing for an existing company to grow at sales,
it's another thing for them to close their initial sales
at a time when they have few, if any, marketing or
sales resources and the product may not even be completely finished.
When you're just getting started,
you need to be able to focus on a more basic approach.
Call it your initial go-to-market strategy.
Who are the early adopter customers?
What do you plan to use for an MVP?
Your seed investors will need to understand how you will close your
first 1, 100, or 1,000 customers.
The number of customers you need to have to
demonstrate that the company is on the right track.
After that you can raise the money you need to
execute on your broader go-to-market strategy.
It may very well be that you're going to have to do most of this
through direct in-person selling. That's fine.
Despite the old saying about building a better mousetrap,
if I build it they will come is not a go-to-market strategy.
Your ads of success will be a lot higher,
if you take the time to study your market,
your customers' needs, and how they make their purchase decisions,
and then craft a strategy for getting your products into their hands
as effectively and profitably as you can.
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